Companies have been talking about agility like it was the Holy Grail since before COVID-19. How do we become more agile? How should we change our processes and our organizational structure to enable agility? How do we embed an agile mindset in our workforce? (Ironically, most conversations on the topic feel distinctly un-agile.)

What “agile” means

First, a bit of history. “Agile” as a concept emerged in software development as a way to time-box activity into short “sprints,” each of which delivered and iteratively improved a functioning work product.

In the past decade, the use of “agile” has broadened to describe small nimble players across many industries that have risen to challenge larger incumbents. These players realized that they didn’t need traditional sales channels – they could sell through Amazon or Shopify. They didn’t need big-budget marketing teams – they could engage with their customers on Instagram. They didn’t need a capital-intensive manufacturing network – they could contract with white-label manufacturers.

Almost overnight, the very thing that had been a competitive advantage – scale – started to look like a disadvantage. It slowed down everything from product development to supply chains to customer insights. Boardrooms in industries as diverse as food, financial services, and pharmaceuticals made agility an urgent imperative.

This follows a well-trodden path of similar efforts – Lean (itself an offshoot of the Toyota Production System), Total Quality Management, Six Sigma – to copy strategies that made companies like Toyota and General Electric successful. Predictably, a cottage industry of Agile academics, authors, certifications, and consultants has sprouted. Agile Lean Six Sigma, anyone?

The agility journey

But before you scramble to become more agile, it’s worth asking “versus what?”

If your goal is to become as agile as a small startup, forget it. No amount of brainstorming, twelve-week sprints (itself an oxymoron) or motivational “North Stars” (yes – I saw one PowerPoint presentation lay out three North Stars – another oxymoron!) will mimic the sheer scrappiness of a small group of driven people with nothing to lose and everything to gain.

More agile versus yesterday? That makes more sense. A good organization should always be looking for ways to improve. Becoming nimbler can never be a bad thing.

Versus your next largest competitor? That makes sense too. If you’re better at withstanding the startup onslaught than the other big guy, you will likely make out OK.

The next question then is “how?”

Here, the answer is clearer. In my experience, three pillars underpin an agile organization. Unsurprisingly, all three bring you closer to mimicking the start-up environment.

1.    Build cross-functional teams. Stop optimizing within functional siloes. It’s a recipe for fiefs and finger-pointing. Instead, create cross-functional mini-organizations and make each one collectively responsible for its business outcomes. It is a rare (and probably doomed) startup where ownership for a course of action doesn’t rest with all the co-founders. Egos don’t matter when decisions are existential.

2.    Speed up decisions. Keep some hierarchical layers if you like – large, global, matrixed organizations may need them to coordinate and align major strategic choices – but push most decision-making responsibility closer to the action. Empower those cross-functional teams and eliminate endless reviews. Startups operate this way by default. When you’re huddled with your co-founders in the proverbial “garage,” information flow and decision-making happen in real time.

3.    Create the right rewards. Develop shared metrics for the cross-functional teams. Start-up co-founders all have equity stakes tied to the startup’s valuation, which in turn is invariably tied to some growth metric. That is a powerful alignment mechanism when you’re trying to make decisions. Also protect risk-taking – it’ll allow your teams embrace failure as a learning opportunity rather than fear its consequences. Startups aren’t afraid to be wrong – if they’re more than fifty percent sure of something, that’s usually good enough to try it.

An agile organization is more akin to a fleet of small boats than a giant cruise ship. A lead boat sets the destination and general route. The crew of each boat has all the knowledge, capabilities, and authority needed to steer their own course and avoid icebergs in their path. And the fleet as a whole is still able to maintain course and rescue a boat that is damaged or immobilized.

In defense of scale

On the other hand, COVID-19 has reminded us that there are genuine advantages to scale. Your scale can enable resilience (the subject of an earlier post), which, the Chief Supply Chain Officer of Unilever agrees, is not the same as agility.

Your global footprint gives you superior access to alternate sources of supply. You almost certainly have a larger financial cushion and better access to capital and credit to help you survive a downturn. You have the ability to idle parts of your manufacturing and distribution network without affecting others. A broader product portfolio may even allow you to pivot faster to a subset of products that suddenly experience a demand spike. (Many large CPGs are re-focusing on core products, including some that were in decline before the pandemic.)

Scale also enables offense. You can invest in upgrading your digital capabilities or lean harder into sustainability transformations. You might acquire a weaker rival or even one of those very startups that is now struggling.

In short, size still matters.